For small businesses, knowledge of the different ways in which your company can acquire additional funding is invaluable as you seek to grow and scale. While there is an abundance of funding opportunities out there for SMEs at the regional, national and continental level, only a small percentage of small businesses take advantage of the schemes and initiatives at their disposal.
SEIS
The Seed Enterprise Investment Scheme, an SME-focussed version of the Enterprise Investment Scheme (EIS), helps early-stage companies acquire equity finance by offering potential investors tax-related benefits in return for their money, provided the SME ownership is willing to release equity in the company in return for funds.
After review by the Small Companies Enterprise Centre, companies that qualify for the scheme are given certificates and supply claim forms to send to investors so that they can claim relief. The SEIS scheme caps company’s fundraising at £150,000 with investors’ investment being capped at £100,000 in a single tax year.
In order to qualify for the SEIS scheme, companies must:
- Be UK-based
- Be less than 2 years old
- Have less than 25 employees
- Work in one of the approved sectors
- Have less than £200,000 in assets
The SEIS scheme represents an invaluable source of capital funds for SME executives, provided that they are willing to release equity in exchange.
R&D Tax Credits
R&D tax credits are a lucrative scheme that rewards small businesses for attempting to undertake risky projects that look to create new solutions or enhance and improve existing ones. Depending on whether a company is profit or loss making, up to 33% of development costs for qualifying projects can be recouped from HMRC.
To file for tax credits, your business must complete a financial report detailing your R&D expenditure, as well as a technical report outlining the challenges involved with your projects and explaining your business’ innovations. After completing the reports, you file your claim with HMRC and, pending approval, your claim is complete within 4-6 weeks.
To qualify for the scheme, your company must:
- Be a UK-based limited company
- Qualify as a small or medium enterprise (SME), meaning your business has less than 500 employees.
- Try to innovate!
While there are a few mitigating factors concerning use of tax credits in conjunction with grants, if your business fulfills the above requirements, you likely qualify for R&D tax credits.
Grants
A highly valuable source of funding for small business, grants are available at the regional, national and continental levels, offering varying amounts of financial support for your projects and developments.
At the European level, R&D grants are given out through the Horizon 2020 initiative, where the grants available are split into 13 subcategories split off from the 3 subjects of “Excellent Science”, “Industrial Leadership”, and “Societal Changes”. You can find a list of the available grants and their requirements here.
Within the home nations, R&D grants are awarded through Innovate UK, the government’s innovation agency. Innovate UK’s grants are awarded throughout the year, meaning applicants should check regularly to see what funding opportunities are available at any given time. Last year, Innovate UK has given out £561M in funding, spread across four main categories: emerging and enabling technologies, health and life sciences, infrastructure systems and manufacturing and materials. You can find more information on Innovate UK’s grants here.
Is your business looking for help in securing funding? Contact us at hello@kapitalise.co.uk to set up a completely free consultation to go over your options.
With a wealth of experience, a 100% success rate and team that has saved millions of pounds for UK SMEs, we can help unlock the maximum possible benefit for your business.